5-procurement management...
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PROCUREMENT PROCUREMENT MANAGEMENT
Rahmi Yuniarti, ST, MT
Anni Rahimah, SAB, MAB
Fakultas Ilmu Administrasi
Universitas Brawijaya - MALANG
Background
� About 40 – 70% of cost of goods sold are from material costs
� Contributions of supply management are of high importance:� Quality of supplied materials � Quality of supplied materials
� Delivery consistency from supplier
� Supplier willingness to deliver more frequently with smaller delivery quantity
� Supplier involvement in developing new products
� Supplier production and delivery flexibility
Activities Related Procurement Management
1. Design strategic relationships with suppliers
2. Selecting appropriate suppliers
3. Chose and implement appropriate technology to support procurement activitiestechnology to support procurement activities
4. Maintain procurement related data bases
5. Do purchase process
6. Evaluating supplier performance
PURCHASING PROCESS
1.1.1.1. Recognition of needsRecognition of needsRecognition of needsRecognition of needs
Need normally comes from a using department
2.2.2.2. Description of the needDescription of the needDescription of the needDescription of the need
Cooperation is needed to avoid conflict in a later stage
3.3.3.3. Identification and study of available suppliersIdentification and study of available suppliersIdentification and study of available suppliersIdentification and study of available suppliers3.3.3.3. Identification and study of available suppliersIdentification and study of available suppliersIdentification and study of available suppliersIdentification and study of available suppliers
The number should be reduced to a workable group
4.4.4.4. Supplier selectionSupplier selectionSupplier selectionSupplier selection
5.5.5.5. Preparation and issuance of the purchase orderPreparation and issuance of the purchase orderPreparation and issuance of the purchase orderPreparation and issuance of the purchase order
6.6.6.6. Follow up and expeditingFollow up and expeditingFollow up and expeditingFollow up and expediting
7.7.7.7. Receipt, Inspection, Invoice, Order CloseReceipt, Inspection, Invoice, Order CloseReceipt, Inspection, Invoice, Order CloseReceipt, Inspection, Invoice, Order Close
Supplier Bagian pengadaan
Gudang User Keuangan
Kirim konfirmasi bisa tidaknya
Buat PO dan kirim ke supplier. Kirim copy ke gudang, user, dan keuangan.
Buat PR / MR dan kirim ke
bagianpembelian
tidaknya pesanan dipenuhi. Kalau bisa, kirim sesuai persetujuan.
Lakukan monitoring dan expedite pengiriman bila perlu. Terima barang
dan lakukan inspeksi bersama bagian kualitas.
Lakukanpembayaran
User mendefinisi kebutuhan barang / jasa
User mengkomunikasikan kebutuhan tersebut ke bagian pengadaan
Bagian pengadaan dan user menentukan model tender / lelang dan kriteria pemilihan supplier
Undang penawaran / proposal (RFQ / RFP)
Seleksi:Tahap 1: Lakukan seleksi awal berdasarkan
aspek teknisTahap 2: Evaluasi berdasarkan aspek finansial
Putuskan pemenang
Buat kontrak, buat dan kirim PO, monitor pengiriman , dan lakukan pembayaran
Kriteria Skor
Kualitas 3.5
Delivery 3.4
Performance history 3.0
Warranties and claim policies 2.8
Price 2.8
Technical capability 2.8
Financial position 2.5
Prosedural compliance 2.5
Communication system 2.5
Reputation and position in industry 2.4
Desire for business 2.4
Criteria in SelectingSuppliers
Desire for business 2.4
Management and organization 2.3
Operating controls 2.2
Repair service 2.2
Attitudes 2.1
Impression 2.1
Packaging ability 2.0
Labor relations records 2.0
Geographical location 1.9
Amount of past business 1.6
Training aids 1.5
Reciprocal arrangements 0.6
Contoh Lain Kriteria Pemilihan Partner(Diterapkan oleh Kodak Corporation)
� Amount of technical supports� Number of innovative ideas
� Supplier’s ability to communicate effectively on important issues
� Flexibility shown by suppliers� Flexibility shown by suppliers� Cycle time, responsiveness, and improvement shown
� Goals commonality with suppliers� Level of trust that exists in dealings with the supplier� Strength of the relationship at each point
A MODEL FOR EVALUATION AND
SELECTION OF SUPPLIERS IN GLOBAL
TEXTILE AND APPAREL SUPPLY CHAINS
International Journal of Physical Distribution & Logistics ManagementVol. 35 No. 7, 2005, pp. 503-523, Emerald Group Publishing Limited
S. Gary Teng and Hector Jaramillo
Model evaluasi supplier yang umumdigunakan
Beberapa penelitian terdahulu yang mendukung
� Simpson et al.,2002
Hampir 50% perusahaan dari industri yang berbeda memiliki prosesevaluasi supplier yang formal
� Weber et al., 1991� Weber et al., 1991
Faktor utama pada metode evaluasi supplier adalah quality, supplier certification, facilities continuous improvement, physical distribution and channel relationship
� Humpreys et all., 1998
Terdapat 4 model evaluasi supplier yang digunakan untuk seleksi suplier, yaitu categorical model, weighted-point model, cost ratio model and dimensional analysis model
Ada 2 metode seleksi supplier yang sering dijadikan literatur :
1. Analytical Hierarchy Process (AHP)
(Saaty,1980;Hill&Nydick,1992;Barbarosoglu&Yazgac,1997)
2. Analytical Network Process (ANP)
Model seleksi supplier untuk textile/apparel SC
(Saaty,1996)
Model dalam penelitian ini diadopsi dari AHP, multiple attribute approach, “what-if” scenarios and sensitivity analy sis .
Model dirancang berdasarkan struktur hirarki dengan beberapa layer :
1. Level 1
� Terdiri atas 5 area (Saaty, 1966, menyebutnya sebagai cluster) yaitudelivery, flexibility, cost, quality dan reliability.
� Setiap cluster memiliki bobot yang diberikan oleh buyers berdasarkankebutuhannya.
2. Level 2
Pengembangan model untuk evaluasi supplier
2. Level 2
� Berisi faktor-faktor yang mempunyai pengaruh signifikan terhadapsetiap cluster.
� Buyers juga harus memberi bobot pada setiap faktor sesuaikebutuhannya.
Index yang menunjukkan performansi supplier adalah :
Total Supplier Score
Total supplier score =
delivery score + flexibility score + quality sc ore
+ reliability score – cost score
Pengembangan model untuk evaluasi supplier
Cluster score juga membutuhkan data berikut :
C = cluster weights
K = factor weights
DV = desired value
V = value that is computed by dividing a buyer score by DV
1. Delivery, terdiri dari 4 faktor :
a. Geographic Location (Kgl)
(4=very close, 3=close, 2=far, 1=very far)
b. Freight Terms (Kft)
(4=excellent, 3=good, 2=fair, 1=poor)
c. Trade Restriction (K )
Cluster untuk menjelaskan performansi supplier
c. Trade Restriction (Ktr)
(4=high, 3= moderate, 2=low, 1=free)
d. Total Order Lead Time (Klt)
(4=15-20 days, 3=21-25 days, 2=26-30 days, 1=more 30 days)
Delivery score = CD [(Kgl*Vgl)+(Kft*Vft)–(Ktr*Vtr)+(Klt*Vlt)]
CD : weight of delivery cluster
Vgl, Vft, Vtr, Vlt : value obtained for each factor dividing DV
2. Flexibility, terdiri dari 5 faktor :
a. Capacity (Kc)
(4=very high, 3=high, 2=acceptable, 1=low)b. Inventory Availability (Kiv)
(4=very high, 3=high, 2=acceptable, 1=low)c. Information Sharing (Kis)
(4=very high, 3=high, 2=acceptable, 1=low)
Cluster untuk menjelaskan performansi supplier
(4=very high, 3=high, 2=acceptable, 1=low)d. Negotiability (Kn)
(4=very high, 3=high, 2=acceptable, 1=low)e. Customization (Kcu)
(4=very high, 3=high, 2=acceptable, 1=low)
Flexibility score = CF [(Kc*Vc)+(Kiv*Viv)+(Kis*Vis)
+(Kn*Vn)+(Kcu*Vcu)]
CF :weight of flexibility clusterVc, Viv, Vis, Vn, Vcu: value obtained for each factor dividing DV
3. Cost, terdiri dari 3 faktor :
a. Suppliers’ Selling Price (Ksp)
(4=high, 3=acceptable, 2=low, 1=very low)b. Internal Cost (Kic)
(4=high, 3=acceptable, 2=low, 1=very low)c. Ordering and Invoicing (Koi)
Cluster untuk menjelaskan performansi supplier
c. Ordering and Invoicing (Koi)
(4=excellent, 3= good, 2=fair, 1=poor)
Cost score = CC [(Ksp*Vsp) + (Kic*Vic) - (Koi*Voi)]
CC : weight of cost clusterVsp, Vic, Voi : value obtained for each factor dividing DV
4. Quality, terdiri dari 4 faktor :
a. Continuous Improvement Program (Kip)
(4=high, 3=moderate, 2=acceptable, 1=poor)
b. Customer Service (Kcs)
(4=very high, 3=high, 2=acceptable, 1=poor)
Cluster untuk menjelaskan performansi supplier
(4=very high, 3=high, 2=acceptable, 1=poor)
c. Certifications (Kct)
(4=excellent, 3= good, 2=fair, 1=poor)
d. % of On-time Shipments (Kot)
(4=very high, 3=high, 2=moderate, 1=low)
Quality score = CQ [(Kip*Vip)+(Kcs*Vcs)+(Kct*Vct)+(Kot*Vot)]
CQ : weight of quality cluster
Vip, Vcs, Vct, Vot : value obtained for each factor dividing DV
5. Reliability, terdiri dari 4 faktor :
a. Feeling of Trust (Kt)
(4=very high, 3=high, 2=moderate, 1=low)
b. Countrys’ Political Situation (Kps)
(4=excellent, 3=good, 2=fair, 1=poor)
c. Currency Exchange Situation (K )
Cluster untuk menjelaskan performansi supplier
c. Currency Exchange Situation (Kce)
(4=very favorable, 3=favorable, 2=neutral, 1=non favorable)
d. Warranty Policies (Kwp)
(4=very favorable, 3=favorable, 2=neutral, 1=non favorable)
Reliability score = CR [(Kt*Vt)+(Kps*Vps)+(Kce*Vce)+(Kwp*Vwp)]
CR : weight of reliability cluster
Vt, Vps, Vce, Vwp : value obtained for each factor dividing DV
The supplier performance evaluation
matrixSupplier Supplier Supplier
Cluster Weight Factors Weight DV A B C
Delivery CD Geographic location Kgl
Freight terms Kft
Trade restrictions Ktr
Total order lead time Klt
Flexibility CF Capacity Kc
Inventory availability Kiv
Information sharing Kis
Negotiability KnNegotiability Kn
Customization Kcu
Cost CC Supplier’s selling price Ksp
Internal cost Kic
Ordering and invoicing Koi
Quality CQ Continuous improv. programs Kip
Customer service Kcs
Certifications Kct
Percent of on-time shipments Kot
Reliability CR Feeling of trust Kt
Country’s political situation Kps
Currency exchange situation Kce
Warranty policies Kwp
Table I.SCORE Proposed decision matrixNotes: DV = desired value for supplier selection
A case study for supplier evaluation
Three suppliers located in different geographical regions. They are :
� Supplier A (Mexico), � Supplier A (Mexico),
� Supplier B (South America), and
� Supplier C (China).
Supplier A(Mexico)
Cluster Factors Explanation Score
DeliveryGeographic location
Close to USA, possible to have frequent shipments of small quantities
4
Freight terms Exceeds the buyer's expectations regarding possible freight terms
4
Trade restrictions Supplier and buyer belong to NAFTA, so no trade restrictions
1
Total order lead time
Total order lead time is shorter than its competitors
4
Flexibility Capacity It has reached its production limits 3Inventory availability
it's trying to implement JIT 2
Information sharing
Supplier and buyer's communication channel are very good
3
Negotiability Based on buyer's perception, acceptable 2Customization High level of specialization, difficult to
changes1
Supplier’s selling 2The increase of labor cost and a revaluation Cost
Supplier’s selling price
2
Internal cost 2Ordering and invoicing
Its ordering and invoicing processes are within customer's expectations
4
Quality
Continuous improv. programs
3
Customer service 3Certifications 3Percent of on-time shipments
Generally arrive on time 4
Reliability Feeling of trust 3Country’s political situation
4
Currency exchange situation
Mexican currency exchange situation is not favorable to the US buyers
2
Warranty policies 2
The increase of labor cost and a revaluation of Mexican currency
Supplier B(South America)
Cluster Factors Explanation Score
DeliveryGeographic location
Relatively close to the USA 3
Freight terms 4Trade restrictions It can ship products into USA duty-free 1Total order lead time
Total lead time has been reduced just slightly above the Mexican supplier
3
FlexibilityCapacity There are expansion projects for the near
future, and it has limited capacity currently2
Inventory availability
Willing to maintain high inventory 4
Information sharing
Obsolete information systems 1
Negotiability Very high negotiability 4Customization 4
CostSupplier’s selling price
Lower than Mexican, but higher than Chinese 2
Internal cost It's reducing their internal cost 2Internal cost It's reducing their internal cost 2Ordering and invoicing
Below buyer's expectation 2
Quality
Continuous improv. programs
It only has occasional continuous improvement activities
2
Customer service Buyer's perception recently 3Certifications It doesn't have an ISO 9000 certification 2Percent of on-time shipments
90% on time delivery 3
Reliability Feeling of trust 2Country’s political situation
Political stability 1
Currency exchange situation
Favorable to the buyer 3
Warranty policies It offers to take full responsibility for non-conformities at this time
4
Supplier C(China)
Cluster Factors Explanation Score
DeliveryGeographic location
Far from US 1
Freight terms Insufficient control of its shipping process 1Trade restrictions Moderate 2Total order lead time
Less competitive than supplier A and B 2
Flexibility Capacity 3Inventory availability
Willing to maintain buyer desired inventory levels
4
Information sharing
Deficient use of EDI 2
Negotiability 4Customization Has capacity above buyer’s expectations
and flexibility to manufacture products with special characteristics
4
CostSupplier’s selling price
Cheap, exceeds buyer's expectation 1
Internal cost Very low 1Internal cost Very low 1Ordering and invoicing
Fair, but is expected to improve after China's access to the WTO
3
Quality
Continuous improv. programs
Continuous improvement has been enhanced by large investment in machinery and information systems
4
Customer service Still low 2Certifications It's not ISO 9000 certified, but has
certification from a US retail chain2
Percent of on-time shipments
Below expectations 2
ReliabilityFeeling of trust It often had in-transit delays in shipping
process that represents its reliability2
Country’s political situation
It's backed by a well established government 4
Currency exchange situation
Very favorable to the buyer 4
Warranty policies 2
The buyer’s needs
� The buyer located in USA.
� It’s looking for a supplier that can assume the entire manufacturing processes and provide competitive prices.
� It wants to reduce its current inventory level, so it prefers suppliers that can provide frequent small quantity shipments or vendor managed inventory service. inventory service.
� It wants to make sure that the selected supplier has safety stocks at the levels that can guarantee products’ availability whenever the company needs them.
� It emphasizes the importance of fast and reliable deliveries that can serve its just-in-time system.
� It’s also looking for suppliers that can obtain a long-term and stable partnership with effective communication channels. So the suppliers must have a good EDI system.
The evaluation and analysis of results
Supplier Supplier SupplierCluster Weight Factors Weight DV A Score B Score C Score
Delivery 0.22 Geographic location 0.3 3 4 1.333 3 1.000 1 0.333Freight terms 0.15 3 4 1.333 4 1.333 1 0.333Trade restrictions 0.2 2 1 0.500 1 0.500 2 1.000Total order lead time 0.35 4 3 0.750 3 0.750 2 0.500
0.168 0.146 0.028
Flexibility 0.17 Capacity 0.2 2 3 1.500 2 1.000 3 1.500Flexibility 0.17 Capacity 0.2 2 3 1.500 2 1.000 3 1.500Inventory availability 0.25 4 2 0.500 4 1.000 4 1.000Information sharing 0.25 3 3 1.000 1 0.333 2 0.667Negotiability 0.18 3 1 0.333 4 1.333 4 1.333Customization 0.12 2 1 0.500 4 2.000 4 2.000
0.135 0.172 0.203
Cost 0.25Supplier’s selling price 0.4 2 4 2.000 2 1.000 1 0.500
Internal cost 0.4 2 3 1.500 2 1.000 1 0.500Ordering and invoicing 0.2 4 4 1.000 2 0.500 3 0.750
0.300 0.175 0.063
Supplier A / DV= 4/2 = 2
Cluster’s Weight * [∑ (Factors’ Weight * Score)]
Supplier Supplier SupplierCluster Weight Factors Weight DV A Score B Score C Score
(0.300) (0.175) (0.063)
Quality 0.22Continuous improv. programs
0.1 3 3 1.000 2 0.667 4 1.333
Customer service 0.25 3 3 1.000 3 1.000 2 0.667Certifications 0.3 3 3 1.000 2 0.667 2 0.667Percent of on-time shipments
0.35 4 4 1.000 3 0.750 2 0.500
0.220 0.171 0.149
Reliability 0.14 Feeling of trust 0.3 3 3 1.000 2 0.667 2 0.667Country’s political situation
0.25 3 4 1.333 1 0.333 4 1.333
Currency exchange situation
0.3 4 2 0.500 3 0.750 4 1.000
Warranty policies 0.15 3 2 0.667 4 1.333 2 0.6670.124 0.099 0.131
0.347 0.414 0.448
So, choose supplier C
Tinggi
Tingkat kesulitan
Bottleneck suppliers
Sulit mencari substitusi
Pasar monopoli
Supplier baru sulit
masuk
Critical strategic
suppliers�Penting / strategis
�Substitusi sulit
Non-critical Leverage suppliers
Classifying Items for Relationship Design
Tingkat kepentingan Tinggi Rendah
Rendah
kesulitan Non-critical
suppliersKetersediaan cukup
Item-item cukup standar
Substitusi dimungkinkan
Nilainya relatif rendah
Leverage suppliers�Ketersediaan cukup
�Substitusi
dimungkinkan
�Spesifikasi standar
�Nilainya relatif tinggi
Tinggi
Tingkat kesuitan
Bottleneck suppliers
Penyederhanaan /
standarisasi item
Critical strategic
suppliers
�Strategic
partnership, focus ke
keunggulan strategis
Non-critical suppliers Leverage suppliers
Supplier Relationship Portfolio
Tingkat kepentingan Tinggi Rendah
Rendah
kesuitan Non-critical suppliers
Rendah
Simplifikasi proses,
focus ke harga per
unit
Leverage suppliers
�Pelihara bargaining
power terhadap
supplier
E-Procurement
� Allow you to select a supplier in an open environment or an exclusive supplier in a closed environment.
� Allow you to make a sole purchase of your required products/materials, or make a joint-purchase with other buyer members.
� Allow you to set up a reorder point in relation with a level of inventory. The system can then automatically issue a purchase order for you.
� Allow you to purchase a product or material by way of bargaining, biding or fixed-pricing.
Examples
The Volkswagen Group developed a website in 2000 in which includes applications on:1. Online enquiries2. Online negotiation3. Online catalogue4. Capacity management
The group manages almost all of their annual spendi ng, which is more than 50 billion Euros, via the Intern et.
Garuda Indonesiahttp://www.garuda-indonesia.com/eauction/index.php
Thai Government Purchasinghttp://www.gprocurement.go.th/
EEEE----PROCUREMENT CASE 1PROCUREMENT CASE 1PROCUREMENT CASE 1PROCUREMENT CASE 1
AIRLINE EXAMPLEAIRLINE EXAMPLEAIRLINE EXAMPLEAIRLINE EXAMPLE
� Number of supplier: 9
� Number of bids:46
� Materials Sourced: Mixed Materials Sourced: Mixed consumables
� Negotiation format: Reverse Auction
� Duration:30 minutes with two 5-minute extensions